Walgreens to close Valley distribution center, lay off 400

Job loss at Northampton County site is one of area's largest in recent years.

September 27, 2013|By Dan Sullivan, Of The Morning Call

Walgreens will close its distribution center in Hanover Township, Northampton County, marking one of the largest layoffs in the Lehigh Valley in recent years.

The facility's 400 employees will be laid off in phases, beginning in mid-January and concluding in March. Employees at the center, at 125 Commerce Way in Lehigh Valley Industrial Park IV, were informed of the decision Thursday.

"Our Lehigh Valley Distribution Center has served the company since 1991, making the decision to close it a difficult one," Emily Hartwig of Walgreens corporate media relations said Friday.

Hartwig said the layoffs are part of the drugstore chain's effort to maximize efficiencies at its distribution centers across the region.

"The Lehigh Valley Distribution Center is now underutilized, operating only one shift per day rather than the two shifts typical of our other distribution centers," Hartwig said. "To ensure we're operating at optimal efficiency, the Lehigh volume will be absorbed within other centers that have the capacity."

Hartwig said the company is working to find employees other jobs within the company, including at its retail stores in the region as well a second Northampton County distribution center, at ProLogis Park 33 in Lower Nazareth Township. Walgreens leases that property.

In 1990, the company broke ground on the $30 million, 265,000-square-foot facility it will be shutting down. That facility became operational in 1991 with around 125 employees initially. It will now go up for sale.

Lehigh Valley Economic Development Corp. has already contacted Walgreens and offered to help it find a buyer for its property, LVEDC Executive Director Don Cunningham said. The property could go on the market early next year.

Cunningham said he doesn't expect Walgreens to have any trouble finding a buyer.

"In the Lehigh Valley, industrial land is as hot as it's ever been," he said.

Currently, LVEDC is working with "no less than a half dozen prospects" who are looking for land, he said, noting that the vacancy rate for industrial property is less than 6 percent.

The Walgreens layoff is among the largest in the area in several years. In 2011, Day-Timer, the Lehigh Valley manufacturer of printed calendars, planners and organizers for more than 60 years, announced it was laying off 300 employees.

The laid-off Walgreens employees are being provided or offered severance packages, Walgreens officials said, and the company will work with them to help them through their career transition.

"We are also aware of facilities in the area that are hiring and we are helping our employees with possible placement, including potential opportunities at our Nazareth facility and AmerisourceBergen," Hartwig said.

AmerisourceBergen, a Pennsylvania drug distribution company, has a facility near the Walgreens distribution center that is closing. In March, the two companies announced a 10-year distribution deal in which AmerisourceBergen would distribute branded and generic drugs to more than 8,100 Walgreens locations across the country. Previously the drugstore chain had used Cardinal Health Corp.

Walgreens officials said that while the deal with AmerisourceBergen does indeed help maximize efficiencies, it had no bearing on the decision to close the Lehigh Valley facility.

"It's not unique to Lehigh Valley," said Walgreens spokesman Michael Polzin, adding that the new partnership affects distribution centers nationwide.

Polzin did say that deal has allowed AmerisourceBergen to grow and that therefore it might have the capacity to absorb some of the workload Walgreens will need to make up with the closing of the Lehigh Valley facility.

"Walgreens continues to be an important contributor to the region's economy, employing nearly 4,500 people across Pennsylvania at drugstores and other facilities," Hartwig said.